2020 saw an acceleration of already apparent trends in payments as distinct from markedly altered patterns. One exception was the huge hit to inbound and outbound card spend as a result of the restrictions on international travel. Although data are not yet available, anecdotal evidence suggests a further major shift was an increase in use of e-wallets in 2020. The RBA had reported usage of around 1 per cent of household payments in 2016, increasing to about 5 per cent in 2019 but this may well now be close to 10 per cent.
Buy now, pay later (BNPL) products had already begun to make inroads into the payments arena in Australia, particularly with the 18 to 35-year-old segment. Despite some initial concerns about this primary catchment source for BNPL being particularly impacted by the economic upheavals of COVID-19, this developing payment option continued to gain increased exposure through an enlarged merchant catchment area. BNPL was a factor in the growth of debit transactions. BNPL enjoyed considerable growth but has a value of transactions that is still estimated to be less than 2.5 per cent of total credit, charge and debit purchases.
The extraordinary circumstances of 2020 highlighted the ability of digital payment products to provide options that satisfied the needs of the day. The shifts to remote purchasing, minimal physical contact and desire for increased control and flexibility of budgeting were all pre-existing. 2020 therefore saw not so much a revolution in changes to payments as an acceleration of already apparent trends.
Having watched credit and charge decline from 65 per cent of the value of purchases made with a card 10 years ago to 50 per cent in 2019 and 44 per cent in 2020, it begs the question of whether a return to “normal” will see any recovery in the share of payments for this once-dominant product?
Mike Ebstein is Founder & Principal at MWE Consulting